Korean famous dessert brand “sulbing” will have to return the license fee of KRW956,500,000 to the Chinese company (the licensee). This Chinese company concluded 5 year master franchise contract with sulbing and paid KRW956,500,000 for sulbing’s business mark and knowhow. The Chinese company later discovered that the business mark they were provided had very low chance of registration at the Chinese Trademark Office due to existence of prior similar marks filed/registered in China and filed a lawsuit against sulbing requesting cancellation of the contract and return of the license fee.
Korean Supreme Court decided that it is lawful to cancel the contract since despite their obligation to notify the low chance or registration of their business mark in China according to the doctrine of good faith and sincerity, sulbing did not fulfill their obligation. The Korean Supreme Court also did not accept Sulbing’s argument that the request for return of the license fee is unacceptable based on the terms and condition of the contract between the both parties banning requests for return of license fee even when the contract is terminated, cancelled or invalidated.